Commentary: Looking ahead to the coming week the economic calendar has been arranged to provide a little extra time for traders to nurse sunburns and other Fourth of July related aliments before trading activity levels accelerate again. The first "big" economic report of the week lands on Wednesday with the release of the June Institute of Supply Management's Service Sector index -- followed by the even "bigger" June Nonfarm Payroll figures on Friday. If either report proves stronger-than-expected, (a headline number of 54.0% or more for the ISM Service Sector Index and a nonfarm payroll figure of more than 90,000) look for investors to shove mortgage rates fractionally higher from current levels. As I write, stronger-than-expected numbers for either report is considered by most analysts to be a low probability outcome.
In the run-up to Friday's nonfarm payroll report trading action in the stock markets will be exerting a strong influence on the trend trajectory of mortgage interest rates. In my judgment the Dow will probably "top-out" this week somewhere between 12,550 and 12,800 before turning notably lower into the first week or two of August. If my assessment proves accurate, the coming equity market sell-off will almost surely prove supportive of steady to perhaps fractionally lower mortgage interest rates.
Be patient - be disciplined - and play it by the numbers.
THE MARKET IS ALWAYS RIGHT! . YOU AND I ARE SOME OF THE TIME
